UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              _____________________

                                    FORM 10-K

 X                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF  THE
                  SECURITIES EXCHANGE ACT OF 1934.

                         For the fiscal year ended August 31, 1996.

                  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934.

                             Commission File No. 0-7578

                          ELECTRO-CATHETER CORPORATION 
             (Exact name of the Registrant as specified in Charter)

      New Jersey                                              22-1733406       
(State of Incorporation)                            (I.R.S. Employer ID Number)
 
2100 Felver Court, Rahway, New Jersey                           07065  
(Address of Principal Executive Offices)                   (Zip Code)

Registrant's Telephone Number including Area Code:  908-382-5600

           SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT
                                  Common Stock
                            $.10 par value per share

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934 during the preceding 12 months (or such shorter  period that the Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for at least the past 90 days.

          Yes    X                                  No        

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

     State the aggregate market value of the voting stock held by non-affiliates
of the Registrant.  The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and ask prices of such
stock, as of a specified date within 60 days prior to the date of filing.

     The  aggregate  market value of the  Registrant's  common  stock,  $.10 par
value, held by non-affiliates as of November 18, 1996 is $4,152,136.


     As  of  November  18,  1996,  the  number  of  shares  outstanding  of  the
Registrant's common stock was 6,373,711 shares, $.10 par value.

 


<PAGE>
                                                          PART I

Item 1.           Business

General

     Electro-Catheter  Corporation  ("Company")  is engaged in the  business  of
developing,  manufacturing and marketing  products for hospitals and physicians.
The majority of these products are utilized in connection  with illnesses of the
heart and circulatory system and make use of catheters and related devices.  The
Company  was  incorporated  in New  Jersey in 1961.  The  Company  has  targeted
electrophysiology  as its focal area for future growth,  but intends to maintain
and develop  products for the  emergency  care,  cardiac  surgery,  invasive and
non-invasive cardiology and invasive radiology markets.

     The Company is also seeking to expand its Original Equipment  Manufacturing
("OEM")  business to  capitalize  on its catheter  technology  expertise and its
manufacturing  capabilities.  In September  1996,  the Company  reached a verbal
agreement-in-principle  with another company to perform research and development
and  production for them for a period of one year for a monthly fee of $150,000.
This  arrangement  has not been  reduced to  writing  and  remains  non-binding.
Additionally,  in October  1996,  the Company  reached an  agreement  to license
certain of its  technology to another firm in the medical  industry that is in a
market  segment in which the Company  does not  participate;  this  agreement is
currently  verbal  and has not been  finalized.  These  agreements  include  the
opportunity  to manufacture  products  which would  increase plant  utilization.
There can be no assurance that the Company will receive the manufacturing rights
to these products or be able to manufacture them.

     The Company  operates in one  business  segment,  and markets its  products
worldwide.  Export sales continued to increase and were approximately $2,324,000
in 1996, $1,964,000 in 1995 and $1,718,000 in 1994,  representing  approximately
32%, 27% and 24% of net sales for the years 1996, 1995 and 1994, respectively.

Products

     The  Company  produces a wide range of  catheter  products  intended  to be
utilized by doctors and other  trained  hospital  personnel  for  diagnostic  or
therapeutic  purposes.  Catheters  are hollow  tubes that can be passed  through
veins,  arteries and other  anatomical  passageways.  The Company  considers the
market  within  which it sells its  present  and  proposed  products as a single
industry segment.

     The selling prices for the products marketed by the Company typically range
from thirty-five dollars to five hundred dollars.

          Electrophysiology Catheters

     The  field of  cardiac  electrophysiology  (EP) is one of the most  rapidly
growing areas of medical technology.  The development of transcatheter diagnosis
of the  heart's  conduction  system  and  transcatheter  correction  of  certain
conduction   dysfunctions   have   increasingly   attracted   the  attention  of
cardiologists.  The Company believes that its extensive experience in pacing and
mapping the heart's  conduction  system,  as well as designing and manufacturing
cardiovascular  catheters,  place the Company in a position to take advantage of
this developing market.


                                        2
<PAGE>

     Cardiac  electrophysiology  is the  study of the  electrical  system of the
heart. Cardiac  electrophysiologists  are concerned with electrical disorders in
the heart,  their  etiology,  diagnosis and treatment.  The medical  problems on
which cardiac  electrophysiologists  focus are conduction problems of the heart,
which include tachyarrhythmic episodes which can lead to sudden cardiac death.

     The Company's  diagnostic  catheters are called the Detector,  Investigator
and  Cloverleaf  EP  catheters  and  each  line has its  unique  characteristics
requested by physicians that desire  different  handling  features.  The Genesis
line of steerable  catheters  provides the physicians with a more  sophisticated
mapping tool for difficult diagnostic procedures.  These catheters are available
in many curve and electrode configurations.

     The  Company   markets  its  Circuit  Breaker   steerable   catheters  with
temperature  control for catheter ablation for international  distribution only.
These catheters are compatible with most radiofrequency  generators. The Company
expects to begin  clinical  trials in the U.S. in 1997 in order to seek approval
to market these catheters domestically.

          Pacing and Monitoring Catheters

     The Company's line of monitoring  catheters are made of flexible radiopaque
materials  which are visible in use through  fluoroscopy.  The catheters  have a
variety of tips, shapes and internal configurations and can be manipulated by an
experienced  physician through the anatomy to the desired location.  Through the
use of these catheters,  electrophysiological  data,  pressure and flow readings
and blood samples may be obtained.  In addition,  the Company's catheters may be
utilized  as  conduits  for the  injection  of  radiopaque  materials  into  the
bloodstream  to  permit   fluoroscopic   observation  of  abnormalities  in  the
vasculature.

     Monitoring catheters are marketed under the following names:Baltherm(R)Flow
Directed  Balloon   Catheters,   Pacewedge(R)  Balloon   Guided   Catheters and 
Balwedge(R) Catheters.

     The Company's  pacing  catheters are fabricated  from a number of materials
and frequently consist of an electrode-bearing tube. The tube is guided into the
body and the electrode is delivered through the venous system to the heart where
it is then used for pacing.  This  procedure  involves the delivery to the heart
muscle,  from a source  outside  the body,  of an  electrical  stimulus  causing
contractions like the natural heartbeat. Such pacing is necessary where there is
a  conduction  blockage  in the  heart  causing  the  heart to beat at a slow or
irregular rate.

     One  of   the  pacing   catheters   manufactured   by  the  Company is the 
Balectrode(R) Bipolar  Pacing  Probe. With  this  product,  both  the  amount of
manipulation of the catheter  required to cause the stimulating  electrode to be
positioned in the proper location  of  the  heart and the time required from the
commencement of the procedure  until  it  is  completed,  are substantially less
than they would be if a non-balloon catheter were used as the delivery system.

     The pacing  products  usually are sold in kits  containing the catheter,  a
placement  needle,  connectors  and various other  devices.  These kits are sold
under  various  names,  including  the  following:  Balectrode(R)  Flow-Directed
Temporary Pacing Kit, Silicore(R) Semi-Floating Pacing Kit and Multipace.




                                      3


<PAGE>

                Multi-Purpose Catheters

     Multi-Purpose   catheters  have  features  or  uses  which,  under  certain
circumstances,  result in the  combination of pacing and  monitoring  functions.
Further, the Company manufactures  certain  electrode-bearing  catheters used to
make electrical measurements within the heart and provide electrical stimulation
for both therapeutic and diagnostic purposes.

                Transthoracic Pacing Stylet

     The Company has developed and patented a product for  transthoracic  pacing
and intra-cardiac medication which it is marketing under the name PaceJector(R).
The pacing  electrode is delivered to the heart directly  through the chest wall
rather  than  through  the veins.  The  technique  of  transthoracic  pacing for
emergency  treatment  of cardiac  arrest and certain  types of  life-threatening
heart rhythms was pioneered by the Company.

                Drainage Catheters

     Although the Company's principal activities have been in the cardiovascular
area, it  currently  is  manufacturing  and marketing the Elecath(R)One Step(TM)
Fluid Drainage  System  which  is  used  for  draining  fluid  collections from 
various locations in the body. This system consists of a catheter,  composed  of
a unique formulation  developed  by the Company, mounted on a simple penetration
apparatus. In the Company's  opinion,  the product is useful to many physicians,
in addition to radiologists, and results in more complete and safer drainage.

Production

     The Company  manufactures  its products in a 25,000 square foot facility it
owns and  another  10,000  square  foot  facility  which it leases.  The Company
believes that these  facilities have  sufficient  capacity to meet the Company's
anticipated  catheter  needs  for the  next  two  years.  The  manufacturing  of
catheters is a complex  process and each catheter is assembled  and tested.  The
Company  designs  its  catheters  and  manufactures  a  portion  of the  tubing,
balloons,  and many components with tooling and formulations  developed by it or
especially for it. The Company  maintains  facilities to manufacture  tubing and
balloons  and for the  production  of  catheters  in the  unique  configurations
required for their use. In addition,  where more convenient or when the level of
sophistication  warrants  it, the Company  uses  outside  suppliers  for certain
components.  The Company  contracts  with a third party for the  performance  of
sterilization.  Although most  components  and processes are available from more
than one vendor,  certain  components and processes are manufactured or provided
by single  vendors,  some  involving  molds  owned by the  Company.  The Company
attempts to maintain an adequate  supply of the  components  on hand in order to
minimize any supply interruption from single source vendors to allow for time to
find a  replacement.  There can be no assurance  that the  Company's  ability to
manufacture  certain  products will not be materially  affected by single source
vendors.

Research and Development

     The Company's research and development  activities are devoted primarily to
the  design  and  development  of new  products  and  enhancements  of  existing
products.  For the three  years ended  August 31,  1996,  the  Company  incurred
aggregate  direct  expenses  of   approximately   $3,154,000  for  research  and
development   activities,   including   new   product   development,   of  which
approximately  $1,010,000  was  attributable  to fiscal  year 1996,  $932,000 to
fiscal year 1995,  and  $1,212,000 to fiscal year 1994.  All of such  activities
were sponsored by the Company. The major portion of such  expenses  was related

                                       4
<PAGE>

to salaries  and other  expenses  of  personnel employed on a  regular basis  in
research and development efforts. During 1996, the Company received an advance
of $300,000  from an unrelated company to perform research and development  and
pre-production  planning for which services the Company  recognized  $155,707 in
revenues.  The costs  associated  with these revenues are shown in cost of sales
and,  as such,  are not  included  in  research  and  development  expenses.  In
September  1996,  the  Company  reached an  agreement  in  principle  to perform
research and development and production for the same company for a period of one
year for a monthly fee of $150,000. The details of this agreement have yet to be
finalized.

Sales and Marketing

     The Company  markets and sells its  products  domestically  through its own
sales force.  At November 18, 1996, the Company employed 5 salespersons  in the
field and a home office staff of marketing  and sales  support of 6 people.  The
Company also employs an  International  Marketing  Manager based in Europe on an
independent contractor basis. The Company had one significant distributor in the
United States which was responsible for sales in all or part of thirteen Eastern
states  plus  the  District  of  Columbia.   This   distributor   accounted  for
approximately   11%  and  17%  of  net  sales  for  the  years  1995  and  1994,
respectively.  The Company  terminated its arrangement  with this distributor on
May 31,  1995  and  the  Company  now  markets  its  products  directly  in this
territory.  As  such,  there  were no  sales to this  distributor  in 1996.  The
principal  customers for the Company's  products are hospitals whose  purchasing
decisions  are  determined  on the basis of  assessment  of the  products by the
physicians. No customer accounted for more than ten percent of the Company's net
revenues  for  1996.  International  markets  were  serviced  by  a  network  of
independent distributors.

     Advertising  of the Company's  products  consists  primarily of displays at
medical conventions and meetings,  advertisements in medical journals and direct
mail. The Company also cooperates in the publication of technical papers written
by medical authorities in areas relating to the Company's products.


Personnel

     At November 18, 1996, the Company had approximately 98 full-time employees.
Of the total employees, 64 were engaged in manufacturing and quality control, 10
in general  administration  and  executive  activities,  13 in  engineering  and
research and  development,  and 11 in sales and marketing.  The Company is not a
party to any  collective  bargaining  agreement and considers its relations with
its employees to be good.


Backlog

     At October 31,  1996,  the Company had a backlog of orders for its products
which aggregated  approximately  $389,000, as compared to approximately $692,000
at October 31, 1995.  The Company  typically does not operate with a significant
backlog.  The  majority  of  product  shipments  in a  quarter  relate to orders
received in that quarter.  The Company's actual product  shipments depend on its
production  capacity,  manufacturing  yields and component  availability,  among
other factors.






                                        5
<PAGE>

Competition

     The medical  technology  industry is a highly  competitive  field,  and the
Company  competes with many other companies on current  products and products in
the development  stages.  Many of these competitors have  significantly  greater
financial,  marketing,  sales,  distribution  and technical  resources  than the
Company.  Rapid technological advances by the Company's competitors could at any
time  require  that  the  Company  redesign  a  portion  of  its  product  line.
Accordingly,  there  can be no  assurance  as to the  success  of the  Company's
products in competition with such companies.

     The  Company's  older  products  compete  primarily  with  those of  larger
companies that have greater resources and better distribution capabilities.  The
current  principal basis of competition in these markets is price. The Company's
limited  resources  make it less  capable  than larger  competitors  of offering
aggressive pricing to meet competition.  In addition, certain customers purchase
catheters in blanket  contracts which include  products offered by the Company's
larger  competitors but not by the Company.  For these reasons,  the Company has
not been able to  compete  effectively  during  recent  years in the  market for
non-EP products.

     The electrophysiology  market is also highly competitive and competition is
expected to increase.  These  competitors  currently include USCI, a division of
C.R. Bard, Inc.;  Mansfield and EP Technologies,  divisions of Boston Scientific
Corporation;  CardioRhythm,  Inc., a division of Medtronic, Inc.; Cordis-Webster
Laboratories,  a division of Johnson & Johnson,  Inc.  and Daig  Corporation,  a
division of St. Jude Medical,  Inc. These companies are more capable of offering
a broader  range of  products  to the  cardiologist.  The  Company's  ability to
compete effectively in the future,  could be dependent upon broadening its range
of  products   and/or  an  alliance   with  another   company.   The   Company's
electrophysiology products compete with other treatments, including prescription
drugs, implantable cardiac defibrillators and open heart surgery.

 

     The Company's  catheter  ablation product is not yet approved for marketing
in the U.S., but competitors  have developed  products,  specifically for use in
catheter ablation,  which have approval. The Company plans to begin its clinical
trials for  ablation in 1997 to obtain its  approval.  Because this is a new and
developing market, the primary  competitive  factors are technical  superiority,
financial resources, the timing of regulatory approval,  commercial introduction
and quality.  The Company's  competitive position also depends on its ability to
attract and retain qualified personnel,  develop effective proprietary products,
implement   production  and  marketing  plans  and  secure  sufficient   capital
resources. The Company hopes that it can effectively compete in this market.
 
Patents and New Products

     The Company's policy is to protect its proprietary position by, among other
methods,  filing United States and select foreign patent applications to protect
the technology  that is important to the  development of the business.  Although
the  Company  holds  patents or has  patents  pending  related to several of its
products,  it  believes  that  its  business  as a whole  is not or will  not be
materially dependent upon patent protection.  However, the Company will continue
to seek  such  patents  as it  deems  advisable  to  protect  its  research  and
development efforts and to market its products.  The Company believes that it is
not infringing on any other party's patent.  However,  there can be no assurance
that current and potential  competitors will not file  applications or apply for
patents or additional proprietary rights relating to materials or processes used
by the Company.


                                        6
<PAGE>


     The Company  develops  new  products as a result of its own analysis of the
needs of the  market  which it  serves  and as a result  of needs  perceived  by
physicians  and  researchers  who  work  with  the  Company  on the  design  and
development of the devices and systems needed by them. In certain instances, the
Company pays the  cooperating  physician or  researcher a royalty based upon the
revenues derived from the sales of the product to others.

     The  Company   also  relies  upon   technical   know-how   and   continuing
technological  innovation to develop and maintain its position in the market and
believes  that the  success of its  operations  will  depend  largely  upon such
know-how and  innovation.  The Company  requires  employees and  consultants  to
execute appropriate  confidentiality agreements and assignments of inventions in
connection with their employment or consulting arrangement with the Company.

Government Regulation

     The products  developed by the Company come under the  jurisdiction  of the
Food and Drug  Administration  (the "FDA") of the United  States  Department  of
Health and Human  Services,  as well as other Federal,  state and local agencies
and similar health authorities in foreign countries. The regulations promulgated
by  such  agencies   govern  the   introduction   of  new  medical  devices  and
modifications  to approved  devices,  the observances of certain  standards with
respect to the  manufacture  and labeling of such devices,  the  maintenance  of
certain records and the reporting of potential product defects.

     The  Federal  Food,   Drug  and  Cosmetics   Act,  as  amended,   regulates
manufacturers of "medical  devices".  The Company's products are medical devices
within the  meaning of such Act. An  amendment  to the  Federal  Food,  Drug and
Cosmetics  Act  providing  for the  classification  of medical  devices  and the
establishment  of  standards   relating  to  their  safety  and   effectiveness,
scientific  review of certain devices and the registration of manufacturers  and
others  has been in  effect  since  1976 and has been  supplemented  by the Safe
Medical Devices Act of 1991. Under these provisions,  a manufacturer must obtain
approval from the FDA of a new medical  device before it can be marketed,  which
approval  process  requires,  in the case of certain classes of medical devices,
that the safety and efficacy of such devices be demonstrated by the manufacturer
to the FDA through the conduct of an FDA approved clinical  evaluation  program.
Under certain circumstances, the cost of obtaining such approval may be high and
the  process  lengthy  and no  assurance  can be  given  that  approval  will be
obtained. Although the Company has received FDA approval to market its principal
existing products, or is exempt from formal approval requirements as provided by
law for those devices already in distribution  before May 28, 1976, there can be
no assurance  that the Company will  receive the  requisite  approvals to market
additional products. Furthermore, any substitution by the Company of its current
sources for certain raw materials utilized in its production  processes will, if
such  substitution  results in a change in the  composition of the material,  be
subject to FDA approval,  and there can be no assurance that such approvals will
be obtained.

     Since the devices developed by the Company are intended for "human use", as
defined by the FDA, the Company and such devices are subject to FDA  regulations
which, among other things, allow for the conduct of routine detailed inspections
of  device   manufacturing   establishments   and  require  adherence  to  "good
manufacturing  practices"  ("GMP") in the  manufacture of medical  devices which
include testing, quality control,  design and  documentation  requirements.  The
Company  currently  believes  it  is  in compliance with GMP. 

                                        7
<PAGE>



     In  addition,  certain  other  classes of medical  devices must comply with
industry-wide   performance  standards  with  respect  to  safety  and  efficacy
promulgated by the FDA. The FDA has not yet developed industry-wide  performance
standards with respect to the safety and efficacy of those products manufactured
by the  Company  which  will be  subject  to such  standards.  When  and if such
standards are adopted, the Company will be required to submit data demonstrating
compliance with the standards  (during which period the Company may be permitted
to continue to market products which have been previously approved by the FDA).

     In recent years, the FDA has pursued a more rigorous enforcement program to
ensure that regulated businesses,  like the Company, comply with applicable laws
and regulations. Noncompliance with applicable requirements can result in fines,
penalties,  recall of products,  suspension  of  production  or the inability to
obtain  premarket  clearance or approval for new  products.  The Company  cannot
predict the extent or impact of future  Federal,  state or local  legislation or
regulation.
 

     Many  countries  in which the Company  markets its  products  regulate  the
manufacture, marketing and use of medical devices. The Company intends to pursue
product  approval or registration  procedures in countries where it is marketing
its  products.  For the most part,  the  registration  and  approval  process is
accomplished  in  coordination  with its  international  distributors.  To date,
foreign  regulations  have not adversely  affected the Company's  business.  The
Company  intends  to  make  every  effort  to  comply  with  applicable  foreign
regulations.

     Export  sales of devices that have not  received  FDA  marketing  clearance
generally are subject to export permit  requirements.  In order to obtain such a
permit,  the Company  must provide the FDA with  documentation  from the medical
device  regulatory  authority of the country in which the  purchaser is located,
stating  that the  sale of the  device  is not in  violation  of that  country's
medical  device laws. In April 1996, new  legislation  was enacted to permit the
export  of  unapproved  devices  if the  product  complies  with the laws of the
country and as long as the products  are  approved by any of the  industrialized
countries specified in the export reform  legislation.  The Company has received
such  clearance for its Circuit  Breaker  steerable  catheter  with  temperature
control for ablation and is currently distributing it outside the U.S.

     The  Company  is also  subject  to  various  Federal,  state and local laws
pertaining to such matters as safe working conditions, environmental protection,
fire  hazard  control  and other  regulations.  The  Company is not aware of any
regulations with which it is not in compliance.

Item 2.         Properties

     The Company's principal manufacturing  facilities and executive offices are
located at 2100 Felver Court, Rahway, New Jersey, in premises which it purchased
in fiscal year 1976.  This  property  secures  part of the  indebtedness  to the
T-Partnership  (see Note 7 in Notes to the  Financial  Statements).  The Company
also leases a 10,000 square foot  facility  located in Avenel,  New Jersey.  The
lease for the Avenel facility is on a month-to-month  basis.  These premises are
suitable  for  all  of  the  Company's   current  and  immediately   foreseeable
production, development and administrative functions.


                                        8
<PAGE>

Item 3.         Legal Proceedings

     The  Company is involved in certain  claims and  litigation  arising in the
normal course of business.  Management believes, based on the opinion of counsel
representing  the Company in such  matters,  that the outcome of such claims and
litigation will not have a material effect on the Company's  financial  position
and results of operations.

Item 4.         Submission of Matters to a Vote of Security Holders

     (a) The  Annual  Meeting  of  Shareholders  was held on June 12,  1996 (the
"Annual Meeting").
 
     (b) Not  applicable  because  (i)  proxies  for  the  Annual  Meeting  were
solicited pursuant to Regulation 14A under the Securities  Exchange Act of 1934;
(ii) there was no solicitation in opposition to management's  nominees as listed
in the Company's proxy statement; and (iii) all of such nominees were elected.

     (c) At the Annual  Meeting,  the Company's  shareholders  voted in favor of
management's nominees for election as directors of the Company as follows:

<TABLE>
<CAPTION>

                                   For                           Against
<S>                             <C>                                <C>    

George M. Pavia, Esq.           5,347,591                          4,965
Abraham H. Nechemie             5,347,591                          4,965
Ervin Schoenblum                5,347,591                          4,965
</TABLE>
 

     (d) Not applicable.



                                        9
<PAGE>



                             PART II

Item 5.           Market for the Company's Common Stock and Related 
                  Security Holder Matters

     The Company's common stock is traded in the  over-the-counter  market under
the symbol "ECTH".  The table below shows for the periods  indicated the closing
figures of the Company's  stock,  as reported on the NASDAQ Stock Market.  These
prices  represent  prices  between  dealers and do not include  retail  mark-up,
mark-down or commissions and may not necessarily  represent actual transactions.

<TABLE>

<CAPTION>
                                             FISCAL 1996                                       FISCAL 1995


Quarter                             High                      Low                      High               Low
      <S>                           <C>                    <C>                         <C>                <C>   

      1                              15/16                    7/16                     1 1/4              1
 
      2                             1 9/16                   7/16                      1 3/16             1 1/16
 
      3                             2 7/16                 1 1/4                       1 1/16               3/4

      4                             2 7/8                  1 1/16                       13/16               3/4
</TABLE>
 

     On November 18, 1996, the number of shareholders of record was 783.

     No cash dividends have been declared by the Registrant during the last five
fiscal years nor does the Company plan to pay dividends in the near future.

Item 6.           Selected Financial Data

     The  selected  financial  data set forth below have been  derived  from the
Company's financial  statements  referred to under Item 14. Exhibits,  Financial
Statement  Schedules,  and  Reports on Form 8-K of this  Annual  Report on Form
10-K, and previously  published  historical financial statements not included in
this Annual  Report on Form 10-K.  The selected  financial  data set forth below
should be read in connection with "Item 7. Management's  Discussion and Analysis
of Financial  Conditions and Results of Operations" and the Company's  financial
statements, including the notes thereto, referred to herein.
<TABLE>

<CAPTION>
                                                           YEAR ENDED AUGUST 31,

                                        1996              1995              1994             1993            1992
                                                     (in thousands, except per share data)
<S>                                    <C>             <C>                <C>             <C>              <C>    

Net revenues...........                $ 7,362         $ 7,263            $ 7,248         $ 8,155          $ 7,842
Net loss............                      (892)         (1,136)            (1,372)           (804)            (419)
Working capital.....                     2,025           2,505              2,362           2,798            3,888
Total assets........                     3,893           4,382              4,270           4,956            6,034
Long term liabilities......              1,485           1,200                638              32              544
 
Loss per share......                     ($.14)          ($.18)             ($.24)          ($.14)           ($.11)
 
Dividends on common stock                 none             none               none             none            none

Weighted average number
of shares of common
stock and common stock
equivalents outstand-
ing...............                       6,354           6,027              5,711            5,572            3,932
</TABLE>

                                                                   10
<PAGE>

 
Item 7.             Management's Discussion and Analysis of Financial 
                    Condition and Results of Operations

Results of Operations

Year Ended August 31, 1996 Compared to Year Ended August 31, 1995

     Although 1996 was a difficult year financially, it provided what management
believes,  is a foundation for the future. During 1996, the Company entered into
a  joint   venture   arrangement   with   one  of  the   leading   centers   for
electrophysiology  in  the  U.S.  to  develop  products  for  the  diagnosis  of
ventricular  tachycardia.  The  Company  also began to develop  products  in the
therapeutic area of atrial fibrillation and continues to explore resolutions for
the problems of the  electrophysiologist.  The Company is also seeking to expand
its OEM business in order to  capitalize  on its catheter  technology as well as
its manufacturing capabilities. In June 1996, the Company received an advance of
$300,000  from an  unrelated  party to  perform  research  and  development  and
pre-production  planning.  In  September  1996,  the  Company  reached  a verbal
agreement-in-principle   to  perform   further   research  and  development  and
production for this company. The Company is to receive a monthly fee of $150,000
for a period of one year for this effort.  This arrangement has not been reduced
to writing and remains  non-binding.  In October  1996,  the Company  reached an
agreement to license certain of its technology to another medical device company
that is in a market  segment in which the  Company  does not  participate;  this
agreement is currently  verbal and has not been  finalized.  The  aforementioned
agreements  include the  opportunity to  manufacture  third party products which
could increase plant  utilization.  However,  there can be no assurance that the
Company will receive the  manufacturing  rights to these  products or be able to
manufacture these products.

     Net revenues  increased $99,012 (1.4%) for the fiscal year ended August 31,
1996 to $7,362,436  as compared to the fiscal year ended August 31, 1995.  Total
domestic sales  decreased  $416,351 (7.9%) while  international  sales increased
$359,656  (18.3%) for fiscal 1996 as compared to fiscal 1995.  In addition,  the
Company had revenues of $155,707 in 1996 related to the  performance of research
and development  activities for a third party.  The decline in domestic sales is
attributed  to a decline  in sales in several of the  Company's  product  lines,
especially  the  Company's  steerable  catheters,  and the loss of  field  sales
personnel that have not yet been replaced.  The increase in international  sales
is  attributed  to an  increase  in  sales  of  the  Company's  traditional and
electrophysiology  products,  including sales to distributors in countries where
the Company had not previously been represented.

     Gross profit dollars  decreased  $118,899 (3.5%) in fiscal 1996 as compared
to the prior year. This decrease in gross profit is attributed  primarily to the
increased fourth quarter production costs and write-offs of certain inventories.
The gross  profit  percentage  for 1996 was 44.6% as compared to 46.8% for 1995.
Gross profit for 1996 also included the positive  impact of selling  directly to
hospitals  in the  northeast  region  rather  than  through  a  distributor,  as
previously accomplished, which required discounts. In December 1995, the Company
reduced its  manufacturing  staff as a result of lower than anticipated  demand.
Gross profit was also negatively  affected as a result of this labor  reduction,
since  overhead  expenses were  allocated  over a smaller  direct labor pool. In
October 1996, the Company again reduced its workforce.

     Selling,  general and administrative expenses decreased by $483,820 (14.1%)
for fiscal 1996 as compared to fiscal 1995.  This  decrease  primarily  reflects
lower domestic  marketing and selling  expenses.  This decrease is attributed to
the departure of some of the Company's sales representatives and the Director of
Clinical  Development  who have not been  replaced.  This  decrease  was  offset
partially by hiring an International Marketing Manager.

                                       11
<PAGE>

  


     Research and  development  expense  increased by $78,117  (8.4%) for fiscal
1996 as compared to the prior fiscal  year.  The  increase is  attributed  to an
increase in personnel,  consulting  fees and purchases of materials and supplies
for new product development.

     Interest  expense  increased  in  fiscal  1996  as a  result  of  increased
borrowings  from  the  T-Partnership  (see  Note 7 to  Notes  to  the  Financial
Statements).

     The net  loss  for  fiscal  year  1996 was  $892,940  or $.14 per  share as
compared to a loss of $1,135,890 or $.18 per share for fiscal year 1995.

Year Ended August 31, 1995 Compared to Year Ended August 31, 1994

     Net sales for the fiscal  year  ended  August 31,  1995  increased  $15,764
(0.2%) as compared  to the fiscal year ended  August 31,  1994.  Total  domestic
sales decreased  $231,256  (4.2%) and  international  sales  increased  $247,020
(14.4%)  for fiscal 1995 as  compared  to fiscal  1994.  The decline in domestic
sales is  attributed  predominantly  to a decline in the volume of business from
the Company's sole domestic  distributor.  The Company  terminated its agreement
with  this  distributor  as of  May  31,  1995,  pursuant  to the  terms  of the
agreement.  The  Company is now  selling in this  territory  with  direct  sales
representatives. Sales declines occurred in most of the Company's product lines,
except its diagnostic  steerable  catheters,  which increased as a result of the
extension of its product  line  offerings.  The  decrease in domestic  sales was
partially offset by shipments to an OEM customer for a  special-design  catheter
which will be used by this customer in its clinical  trials for its own product.
However,  there is no assurance  that sales to the OEM customer will continue in
the future. The increase in international  sales is attributed to an increase in
sales of certain of the Company's  traditional and  electrophysiology  products,
including  sales to  distributors  in  countries  where the Company had not been
previously  represented.  The  Company's  plans to  increase  its sales  include
additional  emphasis  on  its  pacing  and  monitoring  products,   new  product
introductions  and  aggressive  pricing  strategies.  However,  there  can be no
assurance that the Company will be successful in its efforts to increase sales.

     Gross profit dollars  increased  $281,162 (9.0%) in fiscal 1995 as compared
to the prior year. This increase in gross profit is attributed  primarily to the
increase in operating  yields and further  absorption of overhead as a result of
the  additional  personnel  required  to  manufacture  some of the new and  more
sophisticated  products.  Gross  profit  has  been  negatively  affected  by the
Company's  aggressive  pricing policy.  The gross profit percentage for 1995 was
46.8% as compared to 43.1% for 1994.

     Selling,  general  and  administrative  expenses  increased  by $41,505 for
fiscal 1995 as compared to fiscal 1994. This increase is attributed primarily to
an increase in marketing/sales  expenses of $264,376 (12.1%) associated with the
addition of new sales  representatives,  the hiring of a National  Sales Manager
and the addition of an International  Marketing Manager.  The increase is offset
by a decrease in corporate and  administrative  expenses of $222,871 (18.3%) due
to lower  administrative  salaries as a result of reduction in personnel,  legal
costs,  consulting fees and expenses  associated with the Company's former Chief
Executive Officer who retired on March 1, 1994.

     Research and  development  expenditures  decreased by $280,029  (23.1%) for
fiscal  1995 as  compared  to fiscal  1994.  The  decrease  is  attributed  to a
reduction  in   personnel,  decreased  purchases  of  research  and  development
materials and  supplies and a reduction in required support  from  manufacturing
for new product development.

                                       12

<PAGE>




     Interest  expense  increased  in  fiscal  1995  as a  result  of  increased
borrowings  from the  T-Partnership  and higher  interest  rates,  including the
amortization  of  the  value  of  warrants  issued  in  conjunction  with  these
borrowings.

     In  August  1994,  the  Company  received  $200,000  in  settlement  of its
litigation with a previous supplier and such amount was included in other income
in fiscal 1994,  thereby  accounting for the reduction in other income in fiscal
1995.

     The net loss for  fiscal  year  1995 was  $1,135,890  or $.18 per  share as
compared to a loss of $1,371,915 or $.24 per share for fiscal year 1994.


Liquidity and Capital Resources

     At August 31, 1996 working  capital  decreased  $480,671 to $2,024,746 from
August 31, 1995.  The current  ratio was 2.7 to 1 at August 31, 1996 as compared
to 3.2 to 1 at August  31,  1995.  Net cash  used in  operating  activities  was
$546,610  for the year ended August 31, 1996 as compared to  $1,143,975  for the
year ended  August 31,  1995.  During  1996,  the  Company  continued  to devote
significant  resources to the development of new products and sales  activities.
The decrease in net cash used in operating activities is primarily the result of
the reduction in the loss from  operations and decreases in accounts  receivable
and inventories. However, this was partially offset by the reduction in accounts
payable.

     On August 31,  1995,  the Company  entered  into an  agreement  with the T-
Partnership to borrow an additional  $500,000  (Lending  Agreement).  In January
1996,  the  Company  and the  T-Partnership  agreed  to a  restructuring  of its
financing  agreement.  The T-Partnership  advanced an additional $200,000 to the
Company  and  agreed to defer  interest  payments  for a period of three  months
(interest payments were added to the outstanding principal  on the T-Partnership
indebtedness).  The total  indebtedness  due to the  T-Partnership at August 31,
1996 was $1,747,125.
 
     The  rate of  interest  is 12% per  annum  and is  payable  monthly  on any
outstanding  balance.  Principal payments of $25,000 began on September 1, 1996.
Any  remaining  balance  is due on August 1,  2001.  The loan is  secured by the
Company's property, building, accounts receivable, inventories and machinery and
equipment.  The  Company is to prepay the  outstanding  balance in the event the
Company is merged into or consolidated  with another  corporation or the Company
sells all or substantially all of its assets.

     In exchange for the additional  advances,  the Company agreed that if it is
not in compliance with certain  financial  covenants,  to be tested on a monthly
basis,  the  T-Partnership  may  declare  an Event  of  Default  and  accelerate
repayment of the  indebtedness.  As of August 31,  1996,  the Company was not in
compliance with this financial covenant.  In addition,  the Company did not make
its required December 1, 1996 principal payment.  However, on December 16, 1996,
the  T-Partnership  agreed not to exercise its right to accelerate the repayment
of indebtedness through September 1, 1997 as a result of non-compliance with the
aforementioned  financial  covenant and the nonpayment of the December principal
payment or any future  principal  payments due in the 1997 fiscal year. 

     In June 1996, the Company received an advance of $300,000 from an unrelated
company to perform  research and  development and  pre-production.  In September
1996, the Company reached a verbal  agreement-in-principle  with such company to
perform  research and  development  and production for a periodof one year for a
monthly fee of $150,000.  This  arrangement  has not been reduced to writing and
remains non-binding.


                                       13
<PAGE>


     The report of the Company's independent auditors on the Company's financial
statements,  included elsewhere herein,  includes an explanatory paragraph which
states that the Company's  recurring  losses and limited  working  capital raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The financial  statements do not include any adjustments  that might result from
the outcome of this  uncertainty.  During 1996,  the Company was able to satisfy
its cash  shortfall  from  operating  activities  with the  borrowings  from the
T-Partnership,  and advances from an unrelated  company to perform  research and
development  and cash on hand. The Company's  ability to continue in business is
dependent upon its ability to generate  sufficient  cash flow from operations or
to obtain additional  financing.  The Company continues to re-evaluate its plans
and adopt certain cost reduction measures. The Company is attempting to increase
sales by examining and, where appropriate,  modifying its distribution  network,
utilizing aggressive pricing and introducing new products to market. There is no
assurance that these programs can be successfully implemented.

     The Company does not plan to pay dividends in the near future.

Recently Issued Accounting Standard

     In March,  1995,  the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-lived  Assets and for  Long-lived  Assets to be Disposed of",
which is  effective  for fiscal years  beginning  after  December  15, 1995.  In
October  1995,  the  FASB  issued  SFAS  No.   123,"Accounting  for  Stock-Based
Compensation",  which is effective for fiscal years beginning after December 15,
1995.  Neither of these  standards is expected to have a  significant  effect on
either the results of operations or financial position of the Company.

Inflation

     Inflation  did not have a material  impact on the results of the  Company's
operations during the last three fiscal years.

Item 8.    Financial Statements and Supplementary Data

     Response  to this  Item is  contained  in  "Item 14 -  Exhibits,  Financial
Statement  Schedules and Reports on Form 8-K", which information is incorporated
herein by reference.

Item 9.    Changes in and Disagreements with Accountants on Accounting and
                           Financial Disclosure

     Not applicable.



                                                            14
<PAGE>

                                                         PART III

Item 10.            Directors and Executive Officers of the Company

     The following table sets forth certain information concerning the Company's
directors and executive officers:

Name, Age, as of November 18,
1996 and Positions and
Offices Held with                     Business Experience During Past 5
   the Company                        Years and Principal Occupation 
   -----------                        ------------------------------ 

George M. Pavia                       Partner in the law firm, Pavia &
Age 68; Director                      Harcourt for over the past five
since 1986(1)                         years.

Abraham H. Nechemie                   Business Consultant. Formerly a partner
Age 72; Director since                in Wiss & Company, a certified public
1992(1)                               accounting firm. Retired from the firm
                                      in 1985.

Ervin Schoenblum                      Acting President since December 1993.
Age 56; Director since                Management Consultant for over five
1992                                  years. Advisor to the Company
                                      since February 1989.

Lee W. Affonso, Age 47;               Vice President of the Company since July
Vice President                        1992 except for the period from September,
                                      1993 to December 1993 when he served as
                                      Senior Sales Specialist; Director of
                                      Marketing & Sales from 1989 to 1992.

Robert W. Kokowitz                    Vice President of the Company since July
Age 41; Vice President                1992. Director of Operations from 1989 to
                                      1992.

Joseph P. Macaluso                    Chief Financial Officer since May 1987.
Age 44; Treasurer and
Chief Financial Officer

Arlene C. Bell                        Secretary since May 1987. Executive 
Age 51; Secretary                     Assistant to the Chairman since 1981, 
                                      and to the Acting President since
                                      March 1, 1994.
______________________
(1)Member of audit committee.

     The  Company's  directors'  terms will  expire  when their  successors  are
elected  and  qualify  at the  annual  meeting of  shareholders.  The  Company's
officers  serve for a period of one year and until their  successors are elected
by the Board of Directors.

     On December 6, 1993 the Board of  Directors  elected Mr.  Ervin  Schoenblum
Acting President replacing Mr. Max Lee Hibbs, former President,  who resigned in
September, 1993.


                                                            15
<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers  and  directors,  and  persons  who own  more  than  ten  percent  of a
registered  class  of the  Company's  equity  securities,  to  file  reports  of
ownership and changes in ownership with the  Securities and Exchange  Commission
("SEC").  Officers,  directors  and greater  than ten percent  shareholders  are
required by SEC  regulation  to furnish  the Company  with copies of all Section
16(a) forms they file.

     Based solely upon the Company's review of the copies of such forms received
by it, pursuant to Section 16(a) and to written representations of its incumbent
directors,  officers  and  beneficial  owners of more than 10% of the  Company's
common stock, the Company believes that,  during the period September 1, 1995 to
August 31, 1996 all filing  requirements  applicable to its officers,  directors
and owners of more then 10% of the Company's  common stock were  complied  with,
except that Ervin  Schoenblum,  Acting  President of the  Company,  effected two
purchase  transactions in connection  with shares of the Company's  common stock
which were not timely  reported;  upon learning of the reporting  obligation the
failure was promptly rectified.

Item 11.            Executive Compensation

      COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

     The following table sets forth all compensation awarded,  earned or paid by
the Company for services  rendered in all  capacities to the Company during each
of the fiscal years ended August 31, 1996,  1995 and 1994 of the Company's Chief
Executive  Officer or person  acting in a similar  capacity,  and the  Company's
officers  whose total  compensation  for the fiscal  year ended  August 31, 1996
exceeded $100,000.

<TABLE>
                                                Summary Compensation Table
 
<CAPTION>
                                                                Long-Term
                                                              Compensation
                                                                   Awards     
                                                Annual          Securities
                                            Compensation        Underlying              All Other
Name and                                        Salary            Options(1)           Compensation                        
Principal  Position              Year                                #                             
                           
<S>                              <C>          <C>                    <C>               <C>    

Ervin Schoenblum(2)              1996         $ 102,000                   -            $         -
Acting President                 1995            86,000              25,000                      -
                                 1994            50,000              25,000                 16,000
 

Lee W.  Affonso                  1996         $ 112,000                   -                      -
Vice President                   1995           117,000                   -                      -
                                 1994           105,000              24,000                      -

Joseph P. Macaluso(3)            1996         $  83,000                   -                 19,000
Treasurer & Chief                1995            83,000                   -                 18,000
  Financial Officer              1994            83,000              24,000                 17,000

 

<FN>

(1) The table reflects the number of options granted under the Company's Incentive Stock Option Plan.
(2) Prior to becoming Acting President in December 1993, Mr. Schoenblum served as a consultant to the
Company. His compensation shown in the last column represents consulting fees.
(3) Other compensation represents commissions on international sales.

</FN>
</TABLE>

     Stock options are also granted to officers and are  determined by the Board
of Directors based upon the  individual's  contribution  to the Company.  During
fiscal year 1996 no options were granted to the named executive officers.

                                       16

<PAGE>


Aggregate Option Exercises and Year-End Option Table

     The following  table provides  information on option  exercises  during the
fiscal year 1996 by the named executive  officers and the value of each of their
unexercised options at August 31, 1996.
<TABLE>
<CAPTION>
                                      AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                                                 AND FY-END OPTION VALUES

(A)                        (B)                      (C)                        (D)                 (E)
                                                                             Number of             Value of
                                                                             Unexercised           Unexercised
                                                                             Options               In-the-Money
                                                                             FY-End (#)            Options
                                                                                                   FY-End ($) (1)
 

                           Shares Acquired           Value                  Exercisable/           Exercisable/
Name                       on Exercise (#)       Realized ($)              Unexercisable          Unexercisable
 
<S>                           <C>                    <C>                 <C>                       <C>    
 
Ervin Schoenblum              -                      -                   48,000/32,000             $30,000/$20,000
Lee W. Affonso                -                      -                   21,900/14,600             $13,688 /$9,125
Joseph P. Macaluso            -                      -                   21,900/14,600             $13,688 /$9,125

<FN>

____________
(1) Calculated on the basis of fair market value of the underlying securities at August 31, 1996 less the
exercise price
</FN>
</TABLE>

Remuneration of Directors

Each non-officer director is compensated $1,000 for each meeting attended.

Item 12.       Security Ownership of Certain Beneficial Owners and
               Management

     A. Set forth below is information concerning persons (including any "group"
as that term is used in  Section  13(d) (3) of the  Securities  Exchange  Act of
1934)  known to the  Company  to own more than 5% of the  common  stock,  of the
Company as of November 18, 1996.
<TABLE>
<CAPTION>
                                                              Amount and
                                                              Nature of
Name and Address of                Beneficial                 Percentage
Beneficial Owner                   Ownership                   of Class(1)
----------------                   ---------                   -----------
<S>                               <C>                            <C>    

T-Partnership                     2,464,844 shares(2)            35.4%
c/o Wiss & Co.
354 Eisenhower Parkway
Livingston, NJ 07039


Bruce Paul                          375,000 shares                5.9%
1 Hampton Road
Purchase, NY 10577
<FN>

----------------------
(1)The common stock deemed to be owned which is not outstanding but subject to
currently exercisable options is deemed to be outstanding for the purpose of
determining the percentage of all outstanding common stock owned.
(2)Includes 83,344 and 500,000 shares, which the T-Partnership has the right to
acquire pursuant to outstanding warrants, which warrants are immediately 
exercisable at prices of $1.425 and $.9875 per share, respectively.
</FN>
</TABLE>


                                       17
<PAGE>


     B. The following  table sets forth the equity  securities of the Company or
any of its parents or subsidiaries  beneficially owned directly or indirectly by
all directors of the Company,  each of the named  executive  officers and by the
directors  and  executive  officers of the Company as a group as of November 18,
1996.
<TABLE>
<CAPTION>

Name of Beneficial        Amount and Nature of              Percentage
      Owner               Beneficial Ownership              of Class(6)
      -----               --------------------              -----------
<S>                        <C>                                <C>    

George M. Pavia             57,366 shares(1)                  0.9%

Abraham H. Nechemie        128,242 shares(2)                  2.0%

Ervin Schoenblum           171,242 shares(2)                  2.7%

Lee W. Affonso              35,300 shares(3)                  0.5%

Joseph P. Macaluso          29,400 shares(4)                  0.5%

All executive officers
and directors as a group   472,250 shares(5)(2)               7.2%
(7 persons)
<FN>
 
----------------------
(1)Includes 36,000 shares subject to currently exercisable options and 16,276
shares owned by Pavia & Harcourt, a law firm of which Mr. Pavia is a member.

(2)Messrs. Nechemie and Schoenblum each have a 5% equity interest in the 
T-Partnership, which owns 1,881,500 shares of the Company's common stock. 
Accordingly, Messrs. Nechemie and Schoenblum each reports beneficial ownership 
of 94,075 shares of the Company's common stock. In addition, Messrs. Nechemie 
and Schoenblum each reports beneficial ownership of 25,000 warrants that were 
issued to the T-Partnership pursuant to the August 31, 1995 Lending Agreement 
with the Company and beneficial ownership of 4,167 warrants in connection with
the March 1995 private placement.  Also included in the table above are 
currently exercisable options for 5,000 and 48,000 shares held by Messrs. 
Nechemie and Schoenblum, respectively.
 
(3)Includes 21,900 shares subject to currently exercisable options.

(4)Includes 21,900 shares subject to currently exercisable options.

(5)Includes 162,500 shares subject to currently  exercisable  options  held by
all  executive   officers  and  directors  of  the  Company   (including   those
individually named in the table above).

(6)The common stock deemed to be owned which is not outstanding but subject to
currently exercisable options is deemed to be outstanding for the purpose of
determining the percentage of all outstanding common stock owned.
</FN>
</TABLE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The Company has no  compensation  committee or Board  Committee  performing
similar   functions.   Ervin   Schoenblum,   the  Company's  Acting   President,
participated in  deliberations  of the Company's  Board of Directors  concerning
executive officer compensation.
 
     On October 11, 1993,  the Company  entered  into an  agreement  with the T-
Partnership to borrow up to $1,000,000.  Ervin Schoenblum,  the Company's Acting
President and director,  and another member of the Company's  Board of Directors
are members of the  T-Partnership.  As of August 31, 1995, the Company had drawn
down all of the  $1,000,000.  On August 31,  1995,  the Company  entered into an
agreement with the  T-Partnership to borrow an additional  $500,000.  In January
1996, the T-Partnership agreed to lend the Company an additional sum of $200,000
and a deferral of interest  payments on all indebtedness for three months. As of
August 31, 1996, the Company had received all of the available funds and had 
outstanding loans of $1,747,125, including deferred interest to the 
T-Partnership.


                                                              18
<PAGE>


     The  rate of  interest  is 12% per  annum  and is  payable  monthly  on any
outstanding  balance.  Principal payments of $25,000 began on September 1, 1996.
Any  remaining  balance  is due on August 1,  2001.  The loan is  secured by the
Company's property, building, accounts receivable, inventories and machinery and
equipment.  The  Company  must prepay the  outstanding  balance in the event the
Company is merged into or consolidated  with another  corporation or the Company
sells all or substantially all of its assets.

     In exchange for the additional  funds, the Company agreed that if it is not
in  compliance  with a  certain  financial  covenant,  to be tested on a monthly
basis,  the  T-Partnership  may  declare  an Event  of  Default  and  accelerate
repayment  of  indebtedness.  As of August  31,  1996,  the  Company  was not in
compliance with this financial covenant.  In addition,  the Company did not make
its required December 1, 1996 principal payment.  However, on December 16, 1996,
the  T-Partnership  agreed not to exercise its right to accelerate the repayment
of indebtedness through September 1, 1997 as a result of non-compliance with the
aforementioned  financial  covenant and the nonpayment of the December principal
payment or any future  principal  payments due in the 1997 fiscal year.

     Under the  provisions  of the original  agreement,  the  T-Partnership  was
granted purchase  warrants which permitted the T-Partnership to purchase 166,667
shares of the  Company's  common  stock at a price of $3.25 per  share.  The new
agreement  states that the  T-Partnership  will surrender its original  purchase
warrant to purchase 166,667 shares of common stock and be granted a new purchase
warrant to purchase  500,000 shares of the Company's  common stock at a price of
$0.9875 per share.  A value has been  allocated to the warrants based upon their
estimated fair market value at the date of the agreement.  Such amount ($50,000)
is amortized as additional  interest expense over the term of the  indebtedness.
The unamortized  balance is shown in other assets in the  accompanying  1996 and
1995 balance  sheets.  The warrants are  immediately  exercisable  and expire on
August 1, 2001. As of August 31, 1996, these warrants remain outstanding.

BOARD COMPENSATION REPORT ON EXECUTIVE COMPENSATION

     The Company has no  compensation  committee or other committee of the Board
of Directors performing similar functions. All members of the Board of Directors
review and determine  executive  compensation  for all executive  officers on an
annual basis.  Ervin  Schoenblum,  the Company's Acting  President,  is the only
executive  officer of the Company  also serving on the Board.  Mr.  Schoenblum's
compensation  as Acting  President  was  negotiated  between the parties and was
based  in  part  on the  amount  of  compensation  paid  to him  while  he was a
consultant to the Company and the level of compensation historically paid by the
Company for this position.

     The Board of Directors has implemented an executive compensation philosophy
that seeks to relate executive compensation to corporate performance, individual
performance  and  creation of  stockholder  value.  Historically,  this has been
achieved through  compensation  programs which focus on both short and long term
results.

     In  accordance  with  the  Board  of  Directors'   executive   compensation
philosophy,  the major component of executive compensation has been base salary.
Salaries  for   executive   officers  are  based  on  current   individual   and
organizational   performance,   affordability  and  competitive  market  trends.
Additional incentives are provided through issuance of incentive stock options.

        Board of Directors:             Abraham H. Nechemie
                                        George M. Pavia, Esq.
                                        Ervin Schoenblum


                                       19
<PAGE>

PERFORMANCE GRAPH

     The following  performance  graph compares the five-year  cumulative  total
return  on the  Company's  Common  Stock  to the S & P 500  Index  and the S & P
Medical  Products and Supplies  Index  assuming  $100 was invested on August 31,
1991 and all dividends were reinvested.


<TABLE>


                                                        Indexed Returns
<CAPTION>
                                                                  Years Ending
   Company/Index                          Aug91        Aug92         Aug93         Aug94         Aug95         Aug96
<S>                                       <C>           <C>         <C>           <C>           <C>           <C>

ELECTRO CATHETER CORP                     100           100.00      125.00         62.50         40.60         81.25
S&P 500 INDEX                             100           107.92      124.34        131.14        159.27        189.10
HLTH CARE(MED PDS&SUPP)-500 *             100           101.42       77.82         90.97        140.04        159.34


* Name change from Medical Products & Supplies

</TABLE>



     Notwithstanding anything set forth in any of the Company's previous filings
under the Securities  Act of 1933 or the  Securities  Exchange Act of 1934 which
might incorporate future filings, the preceding performance graph and the Report
of the  Compensation  Committee  herein  above  provided  shall  not  be  deemed
incorporated by reference into any such filings.

Item 13.         Certain Relationships and Related Transactions

     On October 11, 1993,  the Company  entered  into an  agreement  with the T-
Partnership to borrow up to $1,000,000.  Ervin Schoenblum,  the Company's Acting
President and director,  and another member of the Company's  Board of Directors
are members of the  T-Partnership.  As of August 31, 1995, the Company had drawn
down all of the  $1,000,000.  On August 31,  1995,  the Company  entered into an
agreement with the  T-Partnership to borrow an additional  $500,000.  In January
1996,  the T-Partnership  agreed  to  lend the  Company  an  additional  sum of
$200,000  and a deferral of  interest  payments  on all  indebtedness  for three
months.  As of August 31, 1996,  the Company had  received all of the  available
funds and had outstanding  loans of $1,747,125,  including  deferred interest to
the T-Partnership.

     The  rate of  interest  is 12% per  annum  and is  payable  monthly  on any
outstanding  balance.  Principal payments of $25,000 began on September 1, 1996.
Any  remaining  balance  is due on August 1,  2001.  The loan is  secured by the
Company's property, building, accounts receivable, inventories and machinery and
equipment.  The  Company  must prepay the  outstanding  balance in the event the
Company is merged into or consolidated  with another  corporation or the Company
sells all or substantially all of its assets.


                                       20
<PAGE>

     In exchange for the additional  funds, the Company agreed that if it is not
in  compliance  with a  certain  financial  covenant,  to be tested on a monthly
basis,  the  T-Partnership  may  declare  an Event  of  Default  and  accelerate
repayment  of  indebtedness.  As of August  31,  1996,  the  Company  was not in
compliance with this financial covenant.  In addition,  the Company did not make
its required December 1, 1996 principal payment.  However, on December 16, 1996,
the  T-Partnership  agreed not to exercise its right to accelerate the repayment
of indebtedness through September 1, 1997 as a result of non-compliance with the
aforementioned  financial  covenant and the nonpayment of the December principal
payment or any future  principal  payments due in the 1997 fiscal year.

     Under the  provisions  of the original  agreement,  the  T-Partnership  was
granted purchase  warrants which permitted the T-Partnership to purchase 166,667
shares of the  Company's  common  stock at a price of $3.25 per  share.  The new
agreement  states that the  T-Partnership  will surrender its original  purchase
warrant to purchase 166,667 shares of common stock and be granted a new purchase
warrant to purchase  500,000 shares of the Company's  common stock at a price of
$0.9875 per share.  A value has been  allocated to the warrants based upon their
estimated fair market value at the date of the agreement.  Such amount ($50,000)
is amortized as additional  interest expense over the term of the  indebtedness.
The unamortized  balance is shown in other assets in the  accompanying  1996 and
1995 balance  sheets.  The warrants are  immediately  exercisable  and expire on
August 1, 2001. As of August 31, 1996, these warrants remain outstanding.

 
 



                                                              21
<PAGE>

 
                                                      PART IV

Item 14.       Exhibits, Financial Statement Schedules and 
               Reports on Form 8-K

               (a)   The following documents are filed as a part of the Report:

               1.    Financial Statements

               See:  Index to Financial Statements
 
               2.    Financial Statement Schedules

               See:  Index to Financial Statements

     All other  schedules are omitted  because of the absence of the  conditions
under which they are required or because the required information is included in
the financial statements and the notes thereto.


              3.    Exhibits(1)

       (3)(a)       Registrant's Certificate of Incorporation as amended through
                    April 11, 1978 - filed as an Exhibit to Registrant's Report
                    on Form 10-K for the fiscal year ended August 31, 1981, and
                    incorporated by reference herein as an exhibit hereto.

       (3)(b)       Amendment to Registrant's Certificate of Incorporation,dated
                    March 20, 1985 - filed as an Exhibit to Registrant's Report
                    on Form 10-Q for fiscal quarter ended May 31, 1985, and
                    incorporated by reference herein as an exhibit hereto.

       (3)(c)       Amended and Restated By-laws - filed as an Exhibit to
                    Registrant's Report on Form 10-K for the fiscal year ended
                    August 31, 1989, and incorporated by reference herein as an
                    exhibit hereto.

       (10)(d)      Registrant's 1984 Employee Stock Purchase Plan, filed as an
                    Exhibit to Registrant's Report on Form 10-Q for the second
                    quarter of fiscal year 1984 ended February 29, 1984, and
                    incorporated by reference herein as an exhibit hereto.

       (10)(h)      Registrant's 1987 Incentive Stock Option Plan filed as an
                    Exhibit to the Registrant's Report on Form 10-K for the
                    fiscal year ended August 31, 1987, and incorporated by 
                    reference as an exhibit hereto.(2)

       (10)(i)      Registrant's 1990 Incentive Stock Option Plan filed as an
                    Exhibit to the Registrant's Report on Form 10-K for the
                    fiscal year ended August 31, 1990, and incorporated by 
                    reference as an exhibit hereto.(2)

       (10)(j)      Registrant's 1992 Incentive Stock Option Plan filed as an
                    Exhibit to the Registrant's Report on Form 10-K for the
                    fiscal year ended August 31, 1992, and incorporated by 
                    reference as an exhibit hereto.(2)


(1) The Company's current, quarterly and annual reports are filed with the
Securities and Exchange Commission under file No. 0-7578.
(2) Management contract or compensatory plan or arrangement.


                                                        22

<PAGE>


       (10)(k)      Agreement dated October 11, 1993 between Registrant and the
                    T-Partnership filed as an exhibit to Registrant's Report on
                    Form 10-K for the fiscal year ended August 31, 1993, and
                    incorporated by reference as an exhibit hereto.

       (10)(l)      Amendment dated November 21, 1994 to Agreement between
                    Registrant and the T-Partnership  filed as an exhibit to
                    Registrant's Report on Form 10-K for the fiscal year ended
                    August 31, 1994, and incorporated by reference as an 
                    exhibit hereto.

       (10)(m)      Lending Agreement dated August 31, 1995 between Registrant
                    and the T-Partnership filed as an exhibit to the
                    Registrant's Report on Form 10-K for the fiscal year ended
                    August 31, 1995 and incorporated by reference as an exhibit
                    hereto.

       (10)(n)      Composite Modification Agreement between the Registrant and
                    the T-Partnership dated January 1, 1996 filed as an exhibit
                    hereto.

       (22)         Subsidiaries - Electro-Catheter International Corp.

       (24)         Consent of KPMG Peat Marwick LLP filed as an exhibit hereto.

       (27)         Financial Data Schedule which is submitted electronically to
                    the Securities and Exchange Commission for information only
                    and is not filed.
 
             (b)    Reports on Form 8-K :  None.

             (c)    Exhibits:        Reference is made to the list of exhibits
                                     contained in item 14(a) 3 above.
































                                     
                                      23

<PAGE>

                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the Registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

 
                                     ELECTRO-CATHETER CORPORATION
                                            (Registrant)


                                     By: s/Ervin Schoenblum     
                                         -------------------
                                         Ervin Schoenblum
                                         Acting President
Dated: December 13, 1996

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Company and the
capacities and on the dates indicated:




Dated: December 13, 1996                /s/Ervin Schoenblum                
                                        -------------------
                                        Ervin Schoenblum, Acting President
                                        & Director

Dated: December 13, 1996                /s/Joseph P. Macaluso              
                                        ----------------------
                                        Joseph P. Macaluso
                                        Principal Accounting Officer


Dated: December 13, 1996                /s/George M. Pavia                 
                                         -------------------
                                        George M. Pavia, Director


Dated: December 13, 1996                /s/Abraham H. Nechemie             
                                         -------------------
                                        Abraham H. Nechemie, Director

                                       24
<PAGE>

                          ELECTRO-CATHETER CORPORATION

                          Index to Financial Statements





                                                                        Page

Independent Auditors' Report                                             F-1
Financial Statements:
     Balance Sheets - August 31, 1996 and 1995                           F-2
     Statements of Operations - Years ended August 31, 1996,
      1995 and 1994                                                      F-3
     Statements of Stockholders' Equity - Years ended August 31,
      1996, 1995 and 1994                                                F-4
     Statements of Cash Flows - Years ended August 31, 1996,
      1995 and 1994                                                      F-5
     Notes to Financial Statements                                       F-7

Financial Statement Schedule:

     II - Valuation and Qualifying Accounts                             F-17


All other schedules are omitted for the reason that they are not
required or are not applicable or the required information is shown
in the financial statements or notes thereto.



<PAGE>

                          Independent Auditors' Report



The Board of Directors
Electro-Catheter Corporation:


     We have audited the financial statements of Electro-Catheter Corporation as
listed in the accompanying index. In connection with our audits of the financial
statements,  we have also audited the financial  statement schedule as listed in
the  accompanying  index.  These  financial  statements and financial  statement
schedule are the responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial  statements and financial  statement
schedule based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in  all  material   respects,   the  financial   position  of  Electro-Catheter
Corporation  at August 31, 1996 and 1995,  and the results of its operations and
its cash flows for each of the years in the  three-year  period ended August 31,
1996 in conformity with generally accepted  accounting  principles.  Also in our
opinion,  the related financial statement schedule,  when considered in relation
to the basic financial  statements  taken as a whole,  presents  fairly,  in all
material respects, the information set forth therein.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has suffered recurring losses from operations
and has limited working capital  resources which raise  substantial  doubt about
its  ability to  continue as a going  concern.  Management's  plans in regard to
these  matters are also  described in Note 2. The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.


KPMG Peat Marwick LLP

Short Hills, New Jersey
November 7, 1996, except as to the 
third paragraph of Note 7, which is as 
of December 16, 1996.



                                       F-1


<PAGE>

<TABLE>

                          ELECTRO-CATHETER CORPORATION

                                 Balance Sheets

                            August 31, 1996 and 1995

<CAPTION>
                                                                 August 31,        August 31,
                                                                    1996              1995 
                                                                    ----              ---- 


                       Assets
<S>                                                          <C>                         <C>    
Current assets:

     Cash and cash equivalents                               $    275,283                  304,385
     Accounts receivable, less
        allowance for doubtful
        accounts of $15,000 in 1996
        and $76,746 in 1995                                     1,016,201                1,206,288
     Inventories                                                1,862,179                2,093,079
     Prepaid expenses and other current assets                     64,344                   43,030
                                                                   ------                   ------

     Total current assets                                       3,218,007                3,646,782


Property, plant and equipment, net                                551,698                  598,787
Other assets, net                                                 123,407                  135,947
                                                                  -------                  -------

       Total assets                                          $  3,893,112                4,381,516
                                                             ============                =========

        Liabilities and Stockholders' Equity

Current liabilities:
    Current installments of long-term debt                       300,000                   13,055
    Current installments of capitalized
           lease obligations                                       7,489                     --
    Accounts payable, trade                                      345,888                  702,137
    Deferred revenues                                            144,293                     --
    Accrued expenses                                             395,591                  426,173
                                                                 -------                  -------

 Total current liabilities                                      1,193,261                1,141,365

Subordinated debentures due to
 T-Partnership, excluding current portion                       1,447,125                1,200,000
Capitalized lease obligation,
 excluding current installments                                    37,756                     --
                                                                   ------                   ------ 

      Total liabilities                                         2,678,142                2,341,365
                                                                ---------                ---------

Stockholders' equity:
     Common stock $.10 par value
       Authorized 20,000,000 shares;
       issued 6,373,711 in 1996 and
       6,336,300 in 1995                                          637,371                  633,630
Additional paid-in capital                                     10,679,316               10,615,298
Accumulated deficit                                           (10,101,717)              (9,208,777)  
                                                              -----------               ----------   
       Total stockholders' equity                               1,214,970                2,040,151
                                                                ---------                ---------
Commitments and contingencies                                         --                       --
                                                                ---------                ---------

    Total liabilities and
     stockholders' equity                                    $  3,893,112                4,381,516
                                                             ============                =========
                                                             
See accompanying notes to financial statements
</TABLE>                                                                  
                                                                         F-2
<PAGE>




<TABLE>




                                                     ELECTRO-CATHETER CORPORATION

                                                        Statements of Operations
 
                                               Years ended August 31, 1996, 1995 and 1994

<CAPTION>

                                                           1996                     1995                   1994
                                                           ----                     ----                   ----
<S>                                                     <C>                      <C>                     <C>
 
Net revenues, including research
    and development revenue of
    $155,707 in 1996                                    $ 7,362,436              7,263,424               7,247,660
Cost of goods sold                                        4,079,502              3,861,591               4,126,989
                                                          ---------              ---------               ---------
 
          Gross profit                                    3,282,934              3,401,833               3,120,671
 

Operating expenses:
  Selling, general and
    administrative                                      2,954,991              3,438,811               3,397,306
  Research and development                              1,010,073                931,956               1,211,985
                                                          ---------                -------               ---------
 

          Operating loss                                   (682,130)              (968,934)              (1,488,620)
 

Other income (expense):
   Interest income                                               86                  1,102                   2,761
   Interest expense                                        (210,896)              (168,058)                (92,656)
     Other, principally proceeds from
    settlement of litigation                                      -                      -                 206,600
                                                            -------                -------                 -------
 
Net loss                                                $  (892,940)            (1,135,890)             (1,371,915)
                                                         ===========             ==========              ========== 
 
 
Net loss per common share                                $    (0.14)                 (0.18)                  (0.24)
                                                              ======                  =====                   ===== 



















See accompanying notes to financial statements.

   </TABLE>
                                                               F-3

<PAGE>

<TABLE>

                                             ELECTRO-CATHETER CORPORATION

                                          Statements of Stockholders' Equity

                                      Years ended August 31, 1996, 1995 and 1994
 

<CAPTION>
 
                                                                     Additional                                       Total
                                                   Common              paid-in             Accumulated          stockholders'
                                                   stock               capital               deficit                  equity
                                                   -----               -------               -------                  ------
                                                                    

<S>                                               <C>                  <C>                <C>    

Balances at August 31, 1993                       $568,872             9,958,364          (6,700,972)               3,826,264

Stock options exercised                              6,620                55,168                  --                   61,788

Employee stock plan                                    740                14,990                  --                   15,730

Proceeds from issuance of
     stock warrants                                     --                78,125                  --                   78,125

Net loss                                                --                    --          (1,371,915)              (1,371,915)
                                                  --------              --------          ----------               ---------- 

Balances at August 31, 1994                        576,232            10,106,647          (8,072,887)               2,609,992

Employee stock plan                                    248                 1,988                  --                    2,236

Common stock issued under private placement         57,150               442,913                  --                  500,063

Proceeds from issuance of stock warrants                --                63,750                  --                   63,750

Net loss                                                --                    --          (1,135,890)              (1,135,890)
                                                     ----------       ----------          ----------               ---------- 

Balances at August 31, 1995                        633,630            10,615,298          (9,208,777)               2,040,151


Stock options exercised                              2,350                18,213                  --                   20,563

Employee stock plan                                    287                   779                  --                    1,066

Common stock issued for services rendered            1,104                10,631                  --                   11,735

Amortization of deferred compensation
     expense on stock options                           --                34,395                  --                   34,395

Net loss                                                --                    --            (892,940)                (892,940)
                                                  --------              --------          ----------               ---------- 

Balances at August 31, 1996                       $637,371            10,679,316         (10,101,717)               1,214,970
                                                  ========            ==========         ===========                =========

See accompanying notes to financial statements 

</TABLE>
                                                          F-4





<PAGE>

<TABLE>


                                                    ELECTRO-CATHETER CORPORATION
<CAPTION>
                                                      Statements of Cash Flows

                                           Years ended August 31, 1996, 1995 and 1994

                                                                      1996                    1995              1994
                                                                      ----                    ----              ----
 
<S>                                                            <C>                        <C>                  <C>              

Decrease in cash and cash equivalents:
Cash flows from operating activities:
Cash received from customers                                     $ 7,614,319              7,066,890            7,041,259
    Cash paid to vendors and employees                            (7,961,291)            (8,110,000)          (7,692,414)
    Interest received                                                     86                  1,102                2,761
    Interest paid                                                   (199,724)              (101,967)             (51,891)
    Proceeds from settlement of litigation                                --                     --              200,000
                                                                    -------                 -------              -------

Net cash used in operating activities                            $  (546,610)            (1,143,975)            (500,285)
                                                                 -----------             ----------             -------- 
                                                            

Cash flows from investing activities:
Proceeds from sales of property, plant
   and equipment                                                         --                     --                 6,600
Purchases of property, plant
 and equipment                                                      (34,167)               (12,143)              (44,952)
                                                                    -------                -------               ------- 

Net cash used in investing activities                           $   (34,167)               (12,143)              (38,352)
                                                                -----------                -------               ------- 

Cash flows from financing activities:
      Net proceeds from issuance of stock                                --                500,063                   --
      Net proceeds from issuance of
         subordinated debentures and warrants                       547,125                575,000               625,000
      Proceeds from exercise of
         stock options                                               20,563                     --                61,788
Proceeds from employee stock
      purchase plan                                                   1,066                  2,236                15,730
Proceeds from loan on officer's
      life insurance policy                                              --                 25,000               100,000
      Repayment of debt                                             (17,079)               (18,184)             (312,405)
                                                                    -------                -------              -------- 

      Net cash provided by
         financing activities                                       551,675              1,084,115               490,113
                                                                    -------              ---------               -------

      Net decrease in cash                                          (29,102)               (72,003)              (48,524)
      Cash and cash equivalents
        at beginning of year                                        304,385                376,388               424,912
                                                                    -------                -------               -------

      Cash and cash equivalents
         at end of year                                         $   275,283                304,385               376,388
                                                                ===========                =======               =======



                                                                                                                     (Continued)
See accompanying notes to financial statements.
                                                                   F-5



<PAGE>

                                                      ELECTRO-CATHETER CORPORATION

                                                   Statements of Cash Flows, Continued



                                                                     1996                  1995                  1994
Reconciliation of net loss to net cash
  used in operating activities:
Net loss                                                        $ (892,940)             (1,135,890)           (1,371,915)
    Adjustments:
Depreciation and amortization                                      130,524                 137,106               137,795
Amortization of deferred charges                                     8,333                  61,708                30,167
Gain on disposal of property, plant
   and equipment                                                         -                       -                (6,600)
 
Changes in assets and liabilities:
 Decrease(increase) in accounts
    receivable, net                                                190,087                (141,514)             (206,401)
 
Decrease (increase)in inventories                                  230,900                (289,789)              639,520
 
(Increase) decrease in prepaid
    expenses and other current assets                              (21,314)                 96,749                29,626
 
Decrease (increase) in other assets, net                             4,207                   3,527                29,554
 
Increase in deferred revenues                                      144,293                       -                     -
 
(Decrease) increase in accounts
   payable and accrued expenses                                   (340,700)                124,128                217,969
                                                                  --------                 -------                -------
 
 
Net cash used in
  operating activities                                          $ (546,610)             (1,143,975)              (500,285)
                                                                ==========              ==========               ======== 














See accompanying notes to financial statements.
                                                                   F-6
</TABLE>

<PAGE>

                          ELECTRO-CATHETER CORPORATION

                          Notes to Financial Statements

                         August 31, 1996, 1995 and 1994

(1)      Summary of Significant Accounting Policies

         (a)      Nature of Business

         Electro-Catheter  Corporation ("Company") has been in business for over
            35 years. The Company  develops,  manufactures,  markets,  and sells
            products for hospitals and physicians. These products are diagnostic
            and  therapeutic  catheters  which are utilized in  connection  with
            illnesses  of the heart and  circulatory  system.  The  Company  has
            targeted  electrophysiology as its focal area for future growth, but
            intends to maintain and develop products for emergency care, cardiac
            surgery,   invasive  and   non-invasive   cardiology   and  invasive
            radiology.

         (b)      Revenue Recognition

         Revenues are  recognized at the time of shipment and  provisions,  when
            appropriate,  are made  where the right to  return  exists.  Revenue
            under  service  contracts  are  accounted  for as the  services  are
            performed.

         (c)      Cash and Cash Equivalents

         For purposes of the statements of cash flows, the Company considers all
            highly liquid  investments  purchased  with an original  maturity of
            three months or less to be cash  equivalents.  Cash  equivalents are
            carried at cost which approximates market value.

         (d)      Concentrations of Credit Risk

         Financial   instruments  that   potentially   subject  the  Company  to
            concentrations  of credit risk consist  primarily of trade  accounts
            receivable.  The Company's  customer base is primarily  comprised of
            hospitals in the U.S. and distributors outside the U.S. As of August
            31, 1996, the Company  believes it has no significant  concentration
            of credit risk with its accounts receivable.

         (e)      Inventory Valuation

         Inventories  are  stated  at the  lower  of cost  (first-in,  first-out
            method) or market.

         (f)      Patents and Trademarks

         Patents and  trademarks  are  recorded at cost and are  amortized  on a
            straight-line  basis over their  useful  lives.  Such costs,  net of
            accumulated  amortization,  are included in other assets, net in the
            accompanying balance sheets.



                                                                    (Continued)
                                       F-7

<PAGE>

                                          ELECTRO-CATHETER CORPORATION
                                    Notes to Financial Statements, Continued



(1)      Summary of Significant Accounting Policies, cont.

         (g)      Property, Plant and Equipment

         Property,  plant and equipment is carried at cost.  Plant and equipment
            is  depreciated  using the  straight-line  method over the estimated
            useful lives of the assets.

         Repairs and maintenance costs are charged to operations as incurred.

         Betterments are capitalized.  Leasehold improvements are amortized over
            the term of the lease or the useful life of the asset,  whichever is
            shorter.

         When assets are  retired or  otherwise  disposed,  the cost and related
            accumulated  depreciation are removed from the related accounts, and
            any  resulting  gain or loss is  recognized  in  operations  for the
            period.

         (h)      Research and Development

         Research and development costs are charged to expense when incurred.

         (i)      Accounting for Income Taxes

         Deferred tax assets and liabilities are determined based on differences
            between  the  financial  reporting  and  tax  bases  of  assets  and
            liabilities  and are  measured  using the enacted tax rates and laws
            that  will be in  effect  when  such  differences  are  expected  to
            reverse.  The  measurement  of deferred  tax assets is  reduced,  if
            necessary,  by a valuation  allowance for any tax benefits which are
            not expected to be  realized.  The effect on deferred tax assets and
            liabilities  of a change in tax rates is  recognized  in the  period
            that such tax rate changes are enacted.

         (j)      Use of Estimates

         The preparation of financial  statements in conformity  with  generally
            accepted accounting principles requires management to make estimates
            and  assumptions  that affect the amount  reported in the  financial
            statements and accompanying  notes. Actual results could differ from
            those estimates.

         (k)      Stock-Based Compensation

         In October  1996,  the  Financial  Accounting  Standards  Board  issued
            Statement of Financial Accounting Standards No. 123, "Accounting for
            Stock-Based Compensation" ("SFAS 123") which presents companies with
            the alternative of retaining the current  accounting for stock-based
            compensation  or  adopting  a new  accounting  method  based  on the
            estimated  fair value of equity  instruments  granted  to  employees
            during the year.  Companies  that do not adopt the fair value  based
            method  of  accounting  will be  required  to adopt  the  disclosure
            provisions  of SFAS 123  commencing  in  fiscal  1997.  The  Company
            expects to continue applying its current  accounting  principles and
            upon  adoption in fiscal 1997 will  present  the  required  footnote
            disclosures.


                                                                    (Continued)
                                       F-8

<PAGE>

                          ELECTRO-CATHETER CORPORATION
                    Notes to Financial Statements, Continued



(1)      Summary of Significant Accounting Policies, cont.

                 
         (l)      Loss Per Share

         Loss per share is computed using the weighted  average number of shares
            outstanding  during  each year.  Shares  issuable  upon  exercise of
            outstanding stock options, warrants and conversion of debentures are
            not included in the computation of loss per share because the result
            of their inclusion would be anti-dilutive.

         The weighted  average number  of shares  of  common  stock  used in the
            computation of loss per share was  approximately  6,354,000 in 1996,
            6,027,000 in 1995 and 5,711,000 in 1994.

(2)      Liquidity

         The accompanying  financial  statements  have been  prepared on a going
            concern basis which  contemplates  the  continuation  of operations,
            realization of assets and liquidation of liabilities in the ordinary
            course of  business.  The Company  incurred  net losses of $892,940,
            $1,135,890 and $1,371,915 for the years ended August 31, 1996,  1995
            and 1994  respectively,  and at August 31,  1996 had an  accumulated
            deficit of $10,101,717.  The net losses incurred by the Company have
            consumed  working  capital  and  weakened  the  Company's  financial
            position. The Company's ability to continue in business is dependent
            upon its success in generating  sufficient cash flow from operations
            or  obtaining  additional   financing.   The  Company  continues  to
            re-evaluate its plans and adopt certain cost reduction measures. The
            Company is  attempting  to increase  sales by examining  and,  where
            appropriate,   modifying   its   distribution   network,   utilizing
            aggressive  pricing and  introducing  new  products  to market.  The
            Company's  ability to continue as a going concern is dependent  upon
            the successful  implementation of the aforementioned programs. There
            can  be no  assurances  that  these  programs  can  be  successfully
            implemented. The financial statements do not include any adjustments
            relating to the recoverability and classifications of reported asset
            amounts or the  amounts of  liabilities  that might  result from the
            outcome of this uncertainty.
 

(3)      Inventories
<TABLE>

         Inventories consisted of the following:
<CAPTION>
                                                   1996               1995
        <S>                                 <C>                     <C>    
 
        Finished goods                      $    954,997            938,224
        Work-in-process                          490,396            644,957
        Materials and supplies                   416,786            509,898
                                                 -------            -------
 
                                             $ 1,862,179          2,093,079
                                             ===========          =========
 

</TABLE>


                                                                 (Continued)
                                       F-9
 
<PAGE>

                        ELECTRO-CATHETER CORPORATION
                    Notes to Financial Statements, Continued



(4)      Property, Plant and Equipment
<TABLE>

         Property, plant and equipment consisted of the following:
<CAPTION>
                                              1996                  1995
          <S>                           <C>                    <C>    
 
          Land                          $   38,400                38,400
          Building                         153,597               153,597
          Building improvements            952,837               947,956
          Equipment                      2,244,694             2,222,694
          Office furniture and
            equipment                      519,319               512,034
          Leasehold improvements           340,382               340,382
          Sales equipment and
            diagnostic computers           589,348               591,965
          Capitalized leases                49,268                     -
                                            ------               ------        
 
                                         4,887,845             4,807,028
 
          Less accumulated deprecia-
            tion and amortization        4,336,147             4,208,241
                                         ---------             ---------
 

          Net property, plant
            and equipment               $  551,698               598,787
                                        ==========               =======
</TABLE>

(5)      Accrued Expenses
 
         The components of accrued expenses consisted of the following:
<TABLE>

<CAPTION>
                                                 1996                   1995
           <S>                               <C>                      <C> 

           Accrued salaries, wages and
                 payroll taxes               $ 278,263                322,552
           Accrued audit fees                   60,000                 45,000
           Other expenses                       57,328                 58,621
                                                ------                 ------
                                               395,591                426,173
                                               =======                =======

</TABLE>
                                                                  (Continued)
                                      F-10

<PAGE>

                          ELECTRO-CATHETER CORPORATION
                    Notes to Financial Statements, Continued



(6)      Deferred Revenues


         In June 1996,  the  Company  received  an advance of  $300,000  from an
            unrelated   company  to  perform   research  and   development   and
            pre-production  planning  for  them.  For  services  performed,  the
            Company recognized  $155,707 in revenues from this agreement in 1996
            and such  amount is reported in net  revenues  in the  statement  of
            operations.  The remaining $144,293 is recorded as deferred revenues
            in the  accompanying  balance  sheet and will be  recognized  as the
            services are performed in the next fiscal year.

(7)      Subordinated Debentures Due to T-Partnership

         On October 11, 1993, the Company  entered into an agreement with the T-
            Partnership  to borrow up to  $1,000,000.  On August 31,  1995,  the
            Company entered into an agreement with the  T-Partnership  to borrow
            an additional $500,000. In January 1996, the T-Partnership agreed to
            lend the Company an  additional  sum of  $200,000  and a deferral of
            interest  payments  on all  indebtedness  for  three  months.  Ervin
            Schoenblum, the Company's Acting President and director, and another
            member  of the  Company's  Board of  Directors  are  members  of the
            T-Partnership.  As of August 31, 1996,  the Company had received all
            of the  available  funds and had  outstanding  loans of  $1,747,125,
            including deferred interest to the T-Partnership.

         The rate of interest  is 12% per annum and is  payable  monthly  on any
            outstanding  balance.  The agreement provides for repayment to begin
            on September 1, 1996 with  installments  of $25,000 each month.  Any
            remaining  balance is due on August 1, 2001.  The loan is secured by
            the Company's property,  building, accounts receivable,  inventories
            and machinery and equipment. The Company must prepay the outstanding
            balance in the event the Company is merged into or consolidated with
            another corporation or the Company sells all or substantially all of
            its assets.

         In exchange for the additional funds,  the Company agreed that if it is
            not in compliance with a certain financial covenant, to be tested on
            a monthly basis, the  T-Partnership  may declare an Event of Default
            and accelerate repayment of indebtedness. As of August 31, 1996, the
            Company  was not in  compliance  with this  financial  covenant.  In
            addition,  the  Company did not make its  required  December 1, 1996
            principal payment.  However, on December 16, 1996, the T-Partnership
            agreed not to exercise  its right to  accelerate  the  repayment  of
            indebtedness through September 1, 1997 as a result of non-compliance
            with the aforementioned financial covenant and the nonpayment of the
            December  principal payment or any future principal  payments due in
            the 1997 fiscal year.

         Under the provisions of the original  agreement,  the T-Partnership was
            granted  purchase  warrants  which  permitted the  T-Partnership  to
            purchase  166,667 shares of the Company's common stock at a price of
            $3.25 per share.  The new  agreement  states that the  T-Partnership
            will  surrender its original  purchase  warrant to purchase  166,667
            shares of common  stock and be  granted a new  purchase  warrant  to
            purchase  500,000 shares of the Company's common stock at a price of
            $0.9875 per share.  A value has been allocated to the warrants based
            upon their estimated fair market value at the date of the agreement.
            Such amount  ($50,000) is amortized as additional  interest  expense
            over the term of the indebtedness.  The unamortized balance is shown
            in other assets in the accompanying balance sheets. The warrants are
            immediately  exercisable  and expire on August 1, 2001. As of August
            31, 1996, these warrants remain outstanding.


                                                                  (Continued)
                                      F-11

<PAGE>

                          ELECTRO-CATHETER CORPORATION
                    Notes to Financial Statements, Continued



(8)      Capitalized Lease Obligations

         The Company has entered into lease commitments  for equipment that meet
            the  requirements  for   capitalization.   The  equipment  has  been
            capitalized  and  shown in  property,  plant  and  equipment  in the
            accompanying   1996   balance   sheet  (see  Note  3).  The  related
            obligations are also recorded in the accompanying  balance sheet and
            are  based  upon the  present  value  of the  future  minimum  lease
            payments with interest rates of 13.7% to 17.1%.
 
         The annual  maturities   for   capitalized   lease   obligations   and
            subordinated  debentures due to the T-Partnership for the five years
            subsequent to August 31, 1996 are as follows:
<TABLE>
                            <S>                            <C>    

                            1997                           $   307,776
                            1998                               309,042
                            1999                               310,517
                            2000                               312,236
                            2001                               552,799
</TABLE>

(9)      Other Debt

         The Company has borrowed  $125,000 against the cash surrender value of 
            a life insurance policy  of the  former  Chairman  of  the  Company.
            Interest  on the  loan is 6%.  The  loan  and  accrued  interest  is
            recorded as a reduction in the policy's cash  surrender  value which
            is included in other assets in the accompanying balance sheets.

(10)     Stock Options

         On May 20, 1987, the Company's stockholders approved the 1987 Incentive
            Stock Option Plan (the "1987  Plan").  Under the 1987 Plan,  225,000
            shares of authorized but unissued  shares of Common Stock,  $.10 par
            value,  of the Company  were set aside to provide an  incentive  for
            officers  and  other  key  employees  to  render  services  and make
            contributions  to the  Company.  Options  may be granted at not less
            than  their  fair  market  value  at  the  date  of  grant  and  are
            exercisable at such time provided by the grants during the five-year
            period beginning on the date of grant.

         On May 23, 1990, the Company's stockholders approved the 1990 Incentive
            Stock Option Plan (the "1990 Plan").  The terms of the 1990 Plan are
            substantially  the same as the terms of the 1987 Plan. The 1990 Plan
            provides for the  reservation  of 225,000 shares of common stock for
            issuance thereunder.

         On July  15,  1992,  the  Company's   stockholders  approved  the  1992
            Incentive Stock Option Plan (the "1992 Plan"). The terms of the 1992
            Plan are  substantially  the same as the  terms of the 1987 and 1990
            Plans.  The 1992  Plan  likewise  provides  for the  reservation  of
            225,000 shares of common stock for issuance thereunder.


                                                                    (Continued)
                                      F-12

<PAGE>

                          ELECTRO-CATHETER CORPORATION
                    Notes to Financial Statements, Continued



(10)     Stock Options, cont.

         On April 1, 1992, the Board of Directors adopted the 1992 Non-Qualified
            Stock  Option  Plan  pursuant to which  options to purchase  200,000
            shares of common stock may be granted to directors, officers and key
            employees. Options may be granted at a price determined by the Board
            of Directors,  but not less than 80% of the fair market value at the
            date of grant.  Options are exercisable at such time provided by the
            grants,  but each option granted shall terminate no longer than five
            years after the date of grant.
 
         In July 1994,  the  Company  extended  the  expiration  date of certain
            outstanding  options held by two members of its Board of  Directors.
            The  resulting  compensation  expense  is being  amortized  over the
            extension period.

         In October 1994, the Board of Directors  voted in favor of offering all
            employees, officers and directors holding options at a price greater
            than $1.00 per share the opportunity to have those options  replaced
            by stock  options  at a price of $1.00 per share,  representing  the
            fair  market  value at that time.  Accordingly,  options to purchase
            384,300  shares were  terminated  and an equal number of new options
            were issued, which is reflected in the table below. In addition, the
            Company also granted  25,000 stock options to the  Company's  Acting
            President at $1.00 per share.

A summary of all stock option activity follows:
<TABLE>
<CAPTION>
                                            Number           Option
                                              of              Price
                                            Shares          Per share            Total
<S>                                         <C>           <C>                 <C>  
       
Year ended August 31, 1994:
     Granted                                253,200       $  2.25 - 2.75        644,625
     Exercised                               66,200           .88 - 2.50         61,788
     Cancelled or expired                   344,800           .88 - 2.75        617,225
Outstanding at August 31, 1994              480,800           .88 - 5.00      1,083,074
                                           =======            ===========      =========
 
Year ended August 31, 1995:
     Granted                                405,300           .81 - 1.14        407,025
     Cancelled or expired                   395,800          1.19 - 2.75        791,338
Outstanding at August 31, 1995              490,300           .81 - 5.00        698,761
                                            =======           ==========        =======

Year ended August 31, 1996:
     Granted                                 12,900           .81 -  .88         10,794
     Exercised                               23,500                .88           20,563
     Canceled or expired                    129,700           .81 - 5.00        330,231
Outstanding at August 31, 1996              350,000           .81 - 2.75        358,761
                                            =======           ===========        ======


</TABLE>
 
      Options to acquire 164,080 shares of common stock were exercisable at
August 31, 1996.


                                                              (Continued)
                                      F-13

<PAGE>

                          ELECTRO-CATHETER CORPORATION
                    Notes to Financial Statements, Continued



(11)  Employee Stock Purchase Plan

         The Company  has an Employee  Stock  Purchase  Plan  (the  Plan)  which
            provides  for the  issuance  of a maximum  of  75,000  shares of the
            Company's  common stock which were made available for sale under the
            Plan's first offering.

         After the  first  offering,  subsequent  offerings  were  made upon the
            recommendation of the committee administering the Plan. Common stock
            can be purchased through  employee-authorized  payroll deductions at
            the lower of 85% of the fair  market  value of the  common  stock on
            either  the first or last day of  trading  of the stock  during  the
            calendar  year.  It is the  intention  of the Company  that the Plan
            qualify  under  Section  423  of  the  Internal  Revenue  Code.  The
            Company's  Board of  Directors  authorized  extension of the Plan to
            January 1, 1997. During 1996, 1995 and 1994, 2,866,  2,476 and 7,403
            shares, respectively, were purchased under the Plan.
 
(12) Preferred Stock, Common Stock and Paid-in Capital
 
         The Company is authorized to issue up to 1,000,000  shares of preferred
            stock. As of August 31, 1996, no preferred shares have been issued.

         In August 1992, the Company sold 1,666,666  shares of common stock in a
            private   placement  at  $1.20  per  share  for  gross  proceeds  of
            approximately  $2,000,000.  As  compensation  for its  services  the
            placement agent was granted a warrant to purchase  200,000 shares of
            common stock of the Company at an exercise price of $1.80 per share.
            Based upon provisions of the placement agreement, the exercise price
            has been adjusted to $1.67 per share.  This warrant  expires  August
            31, 1997.

         In March  1995,  the  T-Partnership  purchased  571,500  shares  of the
            Company's  restricted  common  stock,  $.10 par value,  in a private
            placement  at $.875 per share for gross  proceeds  of  approximately
            $500,000.  In connection  with this private  placement,  the Company
            also  issued to the  T-Partnership  a purchase  warrant to  purchase
            83,344 shares of the Company's  common stock at an exercise price of
            $1.425 per share.  This warrant will expire five years from the date
            of the agreement.  Ervin Schoenblum,  the Company's Acting President
            and director, and another member of the Company's Board of Directors
            are members of the T-Partnership.

(13) Income Taxes

         A  valuation allowance is provided when it is more likely than not that
            some portion or all of the deferred tax assets will be realized. The
            valuation  allowance for deferred tax assets as of September 1, 1996
            was  $2,983,000 as compared to $3,519,000 at September 1, 1995.  The
            net  change  in the total  valuation  allowance  for the year  ended
            August  31,  1996 was a  decrease  of  $536,000  as  compared  to an
            increase of $260,000 at August 31, 1995.








                                                                   (Continued)
                                      F-14

<PAGE>

                          ELECTRO-CATHETER CORPORATION
                    Notes to Financial Statements, Continued



(13) Income Taxes, cont.

         At August 31, 1996 and 1995,  the tax effects of temporary  differences
            that  give  rise  to  the  deferred  tax  assets  and  deferred  tax
            liabilities are as follows:

<TABLE>
<CAPTION>
 
   Deferred tax assets:                              1996           1995
   --------------------                              ----           ----
                       <S>                        <C>            <C>     
         Inventories                              $ 155,000       104,000
         Accounts receivable,
           due to allowance for
           doubtful accounts                          3,000         18,000
         Contribution carryover                      23,000         23,000
         Compensated absences                        30,000         27,000
         Federal and state net
           operating loss carryforwards           2,209,000      2,549,000
         Research and development
           and investment tax credit
           carryforwards                            635,000        850,000
                                                    -------        -------

           Total gross deferred
              tax assets                          3,055,000      3,571,000

           Less valuation allowance               2,983,000      3,519,000
                                                  ---------      ---------

           Net deferred tax assets                   72,000         52,000

        Deferred tax liabilities:
 
              Excess of tax over financial
                statement depreciation              (72,000)       (52,000)
                                                    -------        ------- 
 
                       Net deferred tax           $     -0-            -0-
                                                      ======         ======  
 
</TABLE>
 
         At August 31, 1996,  the Company had  available  federal net  operating
            loss  carryforwards,  research and  development  and  investment tax
            credit carryforwards that expire as follows:
<TABLE>
<CAPTION>

                        Net             Research
                     operating            and              Invest-
                       loss             develop-             ment
    Expiration         carry-             ment               tax
     date            forwards           credits            credits
    <S>          <C>                    <C>                 <C>    
    1999         $         -             25,000                  -
    2000                   -            275,000             35,000
    2001           4,417,000            246,000             43,000
    2002           2,063,000                  -                  -
    2003             690,000                  -                  -
    2004             268,000                  -                  -
    2005              46,000                  -                  -
    2006             223,000                  -                  -
    2007             454,000                  -                  -
    2008             854,000             11,000                  -
    2009           1,368,000                  -                  -
    2010           1,178,000                  -                  -
    2011             588,000                  -                  -

</TABLE>
                                                                   (Continued)
                                      F-15

<PAGE>

                          ELECTRO-CATHETER CORPORATION
                    Notes to Financial Statements, Continued




(14) Segment Data
 
         The Company  operates  in  one  business  segment.  Export  sales  were
            approximately  $2,324,000 in 1996, $1,964,000 in 1995 and $1,718,000
            in 1994.  Sales to the only  domestic  distributor  of the Company's
            products totalled  approximately  $765,000 in 1995 and $1,261,000 in
            1994, representing approximately 11% of net sales in 1995 and 17% in
            1994. The agreement with this  distributor was terminated on May 31,
            1995 and, as such, there were no sales to this distributor in 1996.

(15) Related Party Transactions

         During fiscal year 1994,  a director  of the Company who is  associated
            with the  T-Partnership  was retained as a management  consultant to
            the Company.  The Company  incurred fees from this individual in the
            amounts of  approximately  $16,000 in 1994. In December  1993,  this
            individual  became the Acting  President  of the  Company  and still
            holds that position.

(16) Commitments and Contingencies

(a)         The Company has  agreements  to lease  facilities  and equipment for
            use in the operations of the business under  operating  leases.  The
            Company  incurred rental expenses in connection with these leases of
            approximately  $116,000 in 1996,  $148,000  in 1995 and  $155,000 in
            1994.

         The following is a  schedule  of future  minimum  rental  payments  for
            operating leases which expire through 2000:

<TABLE>
                       <S>                            <C>    
 
                       1997                           $  26,687
                       1998                              22,007
                       1999                               6,877
                       2000                               4,150
                                                      -----

</TABLE>
 
(b)       Deposits   have been placed with  certain  lessors for which  monthly
            payments will begin when the  equipment is placed in service,  which
            is  tentatively  scheduled  for  January  1997.  The leases  will be
            treated as capital  leases and are for a duration of five years with
            combined annual payments of approximately $80,000.

 
(c)       The Company is involved in certain claims and litigation  arising in
            the normal  course of business.  Management  believes,  based on the
            opinion of counsel  representing  the Company in such matters,  that
            the outcome of such claims and  litigation  will not have a material
            effect  on  the   Company's   financial   position  and  results  of
            operations.



                                                                (Continued)
                                      F-16

<PAGE>

                          ELECTRO-CATHETER CORPORATION
                    Notes to Financial Statements, Continued









<TABLE>




                                                                                                         Schedule II

                                             ELECTRO-CATHETER CORPORATION

                                           Valuation and Qualifying Accounts


 
<CAPTION>
                                                                   Addition
                                              Balance              charged
                                             at begin-             to cost                                Balance
                                              ing of                 and                 Write-           at end
Description                                    year                expenses              offs             of year 
-----------                                    ----                --------              ----             ------- 
<S>                                          <C>                      <C>               <C>               <C>    

1996 Allowance for doubtful accounts         $ 76,796                 39,383            101,179           15,000
====                                         ========                 ======            =======           ======

1995 Allowance for doubtful accounts         $ 21,776                 55,020                  -           76,796
====                                         ========                 ======             ======           ======

1994 Allowance for doubtful accounts         $ 28,139                      -              6,363           21,776
====                                         ========                 ======              =====           ======
 


</TABLE>



 















                                                                    (Continued)
                                      F-17
<PAGE>

                                   Exhibits(1)

      (3)(a) Registrant's  Certificate  of  Incorporation  as amended  through
             April 11, 1978 - filed as an Exhibit to Registrant's Report on Form
             10-K for the fiscal year ended August 31, 1981, and incorporated by
             reference herein as an exhibit hereto.

      (3)(b) Amendment to  Registrant's  Certificate of  Incorporation,  dated
             March 20, 1985 - filed as an Exhibit to Registrant's Report on Form
             10-Q for fiscal  quarter ended May 31, 1985,  and  incorporated  by
             reference herein as an exhibit hereto.

      (3)(c) Amended  and   Restated   By-laws  -  filed  as  an  Exhibit  to
             Registrant's  Report on Form 10-K for the fiscal year ended  August
             31,  1989,  and  incorporated  by  reference  herein as an  exhibit
             hereto.

    (10)(d)  Registrant's  1984 Employee Stock  Purchase  Plan,  filed as an
             Exhibit to Registrant's  Report on Form 10-Q for the second quarter
             of fiscal year 1984 ended  February 29, 1984, and  incorporated  by
             reference herein as an exhibit hereto.

    (10)(h)  Registrant's  1987  Incentive  Stock  Option  Plan  filed as an
             Exhibit to the Registrant's Report on Form 10-K for the fiscal year
             ended August 31, 1987, and  incorporated by reference as an exhibit
             hereto.(2)

    (10)(i)  Registrant's  1990  Incentive  Stock  Option  Plan  filed as an
             Exhibit to the Registrant's Report on Form 10-K for the fiscal year
             ended August 31, 1990, and  incorporated by reference as an exhibit
             hereto.(2)

    (10)(j)  Registrant's  1992  Incentive  Stock  Option  Plan  filed as an
             Exhibit to the Registrant's Report on Form 10-K for the fiscal year
             ended August 31, 1992, and  incorporated by reference as an exhibit
             hereto.(2)


    (10)(k)  Agreement  dated October 11, 1993 between  Registrant and the T-
             Partnership filed as an exhibit to Registrant's Report on Form 10-K
             for the fiscal year ended  August 31,  1993,  and  incorporated  by
             reference as an exhibit hereto.

    (10)(l)  Amendment   dated  November  21,  1994  to  Agreement   between
             Registrant   and  the   T-Partnership   filed  as  an   exhibit  to
             Registrant's  Report on Form 10-K for the fiscal year ended  August
             31, 1994, and incorporated by reference as an exhibit hereto.

    (10)(m)  Lending  Agreement dated August 31, 1995 between  Registrant and
             the T-Partnership filed as an exhibit to the Registrant's Report on
             Form  10-K  for  the  fiscal   year  ended   August  31,  1995  and
             incorporated by reference as an exhibit hereto.

    (10)(n)  Composite  Modification Agreement between the Registrant and the
             T-Partnership dated January 1, 1996 filed as an exhibit hereto.

    (22)     Subsidiaries - Electro-Catheter International Corp.


(1) The Company's current, quarterly and annual reports are filed with the
Securities and Exchange Commission under file No. 0-7578.
(2) Management contract or compensatory plan or arrangement.



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<PAGE>





      (24)   Consent of KPMG Peat Marwick LLP filed as an exhibit hereto.

      (27)   Financial  Data Schedule which is submitted  electronically  to the
             Securities and Exchange  Commission for information only and is not
             filed.
 
              (b)    Reports on Form 8-K :  None.

              (c)    Exhibits:    Reference is made to the list of exhibits 
                                  contained in item 14(a) 3 above.





























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